This is Jersey, screw you and your courtesy

From the NY Times:

In Home Sales, Courtesy Goes a Long Way

ANYONE who has stepped into the often-stressful real estate market in New Jersey lately can hardly help being aware that it is an increasingly rude arena.

With the supercilious buyers, hypersensitive sellers, inconsiderate sales agents and adversarial lawyers, “it really can be a jungle out there,” said Roberta Plutzik Baldwin, a broker for Keller Williams Realty in Montclair, somewhat ruefully.

“In a climate like this, where so many people feel financial anxiety, and sometimes every $100 is an important issue,” she said, “anger and animus seem to come out more frequently.”

Even when people have “tons of money,” said Karen Eastman Bigos, a broker for Towne Realty Group in Short Hills, more and more are “harsh” with remarks and attitudes, especially buyers.

Yet Ms. Bigos and Ms. Baldwin were among a number of real estate professionals emphasizing that courtesy still counts a lot and can sometimes be crucial to getting a deal done at all.

“Many, many times,” Ms. Bigos said, “I’m seeing deals turn on politeness, or the lack of it.”

Ken Baris of Jordan Baris Realtors in West Orange said, “Huge, huge — courtesy is huge.” He recalled selling a house a couple of years ago for a professional hockey player to a buyer who had been taken with the property. The buyer had explained in a warm letter how much it would mean to live in the player’s house. Even though a competing bidder offered $100,000 more during the three-day attorney-review period mandated in New Jersey, the player went with the letter-writing buyer.

Even if everyone is civil, or even gracious, during the precontractual phase, things can get strained when lawyers enter the picture, several brokers pointed out. In today’s market, much of the wrangling over price actually takes place after a buyer has a home inspection done — whereupon a lawyer writes a letter demanding that the seller either pay for repairs or offer a price discount.

“A seller gets a scathing letter from an attorney saying ‘this, that and the other, and more’ has to be fixed, and a seller can be offended,” said Susan Hughes Hunter, the vice president of Lois Schneider Realtor in Summit.

“People feel this is their home, their blood, sweat and tears,” she noted, “and this letter makes it look like the house is falling down. The way attorneys speak is black-and-white, and in truth, it’s not really their job to say, ‘Oh, please, we would so love it if you would be kind enough to fix your roof.’ ”

Ms. Baldwin of Keller Williams says she always urges both buyers and sellers not to take such things personally, and to “think of a real estate sale as business, nothing more.”

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141 Responses to This is Jersey, screw you and your courtesy

  1. grim says:

    Patiently waiting for the headline…

    “US Debt Downgraded, Treasuries Rally on Safe Haven Purchasing”

  2. grim says:

    Yeah, no, seriously, we’re screwed.

  3. Dissident HEHEHE says:


    Sorry about the @ssclown comment last night.

    I think Punch is right though – you run a portfolio that requires all AAA you are likely to dump anything rated AA+ given the environment we are in and the amount of lawsuits that have arisen over MBS and CMBS etc. Alot of those banks have been sued for holding AAA rated paper in those securitized trusts because they “should have known or did know” the rating was a joke. If Moodys and Fitch follow suit on a downgrade down the road then managers open themselves up to a bunch of lawsuits. The lawsuits might be a joke and the difference between AAA and AA+ might be a joke but they still have to pay to defend them.

  4. Oh. So THAT was the stench of death I kept smelling.

    Welcome to the Third World, bitchez. Got shiny?

  5. Polite? Polite?? Keep your cabbage-ass dump and your 11K tax bill. You’ll eventually leave…feet first.

  6. NJGator says:

    3b – previous 187 – A reval/reassess is not intended to lower your taxes. It is meant to create defendable assessments. Also as time goes on, all property values in town do not rise and fall in lockstep. While we have been getting on average 10% drops in our assessment each year due to the drop in our home’s value, there are homes where the assessment was never appealled that are selling today for an amount that is higher than the assessment. Some people will see tax increases out of the new assessment, some people will see decreases and some folks will stay largely the same. The only goal for this is to stop successful tax appeals and to bring every home’s assessment to the same percentage of current market value.

  7. gary says:

    So… tell me again about the part where nominal house prices are not dropping another 20% in our area.

  8. Comrade Nom Deplume says:

    Jersey. It’s different here.

    Well, depending on how things develop, there is a real possibility that the Deplumes will decamp for Mass and swap NJ rude for the less caustic NE rude.

  9. yo'me says:

    How does China and the rest stop the dollar from dropping? Keep on buying more downgraded treasury bonds.If they stop buying this debt we will be forced to austerity and yield will be sky high.
    So what is the meaning of a downgrade if they still buy our debt keep rates down and we still keep on running the printing press?

  10. gary says:

    What’s the under/over on when Timmy submits his resignation?

  11. Comrade Nom Deplume says:

    (10) Gary,

    I’m taking Thanksgiving. The admin will use the diversion of food and football to cover Timmay’s departure and replacement, and may try to slip in some other uber liberals into lesser posts.

  12. gary says:


    The admin will use the diversion of food and football…

    Bread and circuses? :)

  13. Dissident HEHEHE says:

    Was this posted? It has pretty pictures:

    The Tent City of New Jersey: Desperate victims of the economic slump forced to live in makeshift homes in forest

    Read more:

  14. Juice Box says:

    Gary he already did, Present O told him no effing way, he doesn’t have Paulson FU money so he needs to work, has probably 8k monthly nut up in Larchmont. Right now he couldn’t get a job on wall St as a Junior analyst either, nobody is hiring.

  15. Dissident HEHEHE says:

    Check out the Mercedes. Playa has his priorities straight.

  16. gary says:

    The downgrade, hours after markets closed on Friday, is a first for the U.S. since it was granted an AAA rating in 1917.

    I keep reading this statement over and over and it almost feels like I’m watching one of those armageddon movies except, this one is real.

  17. Mikeinwaiting says:

    You want Granite & Stainless here you go:
    By the way electric for heat, run away.

  18. Comrade Nom Deplume says:

    (12) gary

    I see you got my inference.

  19. Comrade Nom Deplume says:

    Boy, yesterday sucked. Had to deal with 2 out of sorts little girls who don’t want to sleep, US debt downgrade is gonna kill my few remaining equities, and worst of all, the Sox lost to the &$#@! Yankees

  20. Comrade Nom Deplume says:

    On attorneys. I agree that I found many in atty review to be a bit abrasive and incompetent, but not all. Further, there is a perception issue, and here in NJ, sellers are offended by just about everything. So I think the perception of rude attorneys is largely that—perception.

  21. Al Mossberg says:


    I hear ya Gary. This is just the opening act. The real horror is yet to be seen.

  22. gary says:

    It’s a beautiful day… I wonder where Obama will be playing golf today. And do they let him smoke his Newports on the golf course? You know… since he’s the Czar… um… President and stuff.

  23. gary says:

    Chinese pianist Lang Lang performed this past January at the White House banquet in honor of Chinese President Hu Jintao. An aspect of that state dinner which has been ignored by the mainstream media is the background, connections, and character not only of Lang, but also of the song that he chose to perform in the presence of the President of the United States.

    Lang played and sang the anthem “My Motherland,” the theme song from Battle on Shangangling Mountain, a Communist Chinese propaganda film attacking America and elevating the People’s Republic of China’s nationalist spirit — in the White House, in the presence of President Obama. The president complicitly smiled along as Lang glorified Red China while damning America.

    We were at a family function back when Obama first got elected and my uncle (passed away last year), who was the first wave at Normandy on D-Day, said that you’ll be astonished at how much change you’ll see in the next couple of years. He said it has nothing to do with his color or race, but more to do with cyclical change, ideology and timing. I think we all sort of knew this on this blog but I find it stunning how accurate he was. I don’t recognize this country any longer and I don’t know if we can reverse the tide. Growing up, I used to smile and feel secure when I saw an American flag… now, when I see it, I feel sad and long for the America I once knew.

  24. Orion says:

    Was the downgrade S&P’s way of sending O a belated birthday present?
    Nothing better than a good round of golf to keep your mind off things.

    This must be the stench someone here keeps talking about. Truly ugly.

  25. 3b says:

    #6 NJ Gator: Thanks for the thorough explanation.

  26. Comrade Nom Deplume says:

    (23) gary,

    I think I noticed this change on a cultural level years ago by, of all things, watching mtv. Obama doesn’t herald the start of the shift, he heralds its ascendancy.

  27. 3b says:

    #14 Juice: Not only are they not hiring, they are laying off again.

  28. gary says:


    I agree. I guess I just didn’t expect such a rapid acceleration. In a time when we needed a prize-fighting contender, we got a rank amateur.

  29. 3b says:

    #28 gary NY Times article this morning, stating basically that the down grade is really no big deal (of course they would say that), sorry having trouble posting the link.

  30. Juice Box says:

    3b another beautiful beach morning here down in Spring Lake, taking the kids this afternoon to the Point for some fun on the rides. I have no worries, we as a family are financially secure not wealthy but not in debt. I am confident we will weather the next decade of decline. Others I know of will end up In Obamavilles aka Hoovervilles because they did not save or plan for a rainy decade.

  31. 3b says:

    #30 Juice: We will be down in SL 2 weeks for a week, looking forward to it. I don’t worry any more we have no debt, money saved, and employed. I have been talking about all of this for the last few years, and if not considered doom and gloom, than some sort of gadfly. Well now it is all here,and all I can really say is I told you so. Enjoy your weekend.

  32. Punch My Ticket says:

    Gary [23],

    I don’t recognize this country any longer and I don’t know if we can reverse the tide. Growing up, I used to smile and feel secure when I saw an American flag… now, when I see it, I feel sad and long for the America I once knew.

    Shades of Michael Moore.

    I was convinced long ago that the sun was setting on the U.S. but, given its demonstrated ability to reinvent itself after the attempted ascendancy of Japan in the 80’s, I figured it would take at least half a century until the eclipse. Nowadays things are different. S&P is right: the political system is fiscally dysfunctional. That’s a structural issue, born of elections every two years and what has become a permanent state of campaign, and has finally fallen victim to a generation of gladhanders and grandstanders whose primary purpose is, to be frank, extend and pretend.

    The state of the general public is even worse. Not only does it tolerate the nonsense from DC, it re-elects these sorry excuses time after time. An army spread wide fighting needless wars with barbarian hordes, but it’s all okay because we have bread and circuses. “Look, Ma, I’m up to level 417 of Angry Birds on my Android phone and there are always Doritos at the 7-11 and, hey, it’s almost time for FOOTBALL, and did you see what Mary Jane posted on Greg’s wall last night!” While Washington fiddles and burns. Yeah, this has never happened before. If only we could get a volcano to bury some minor burg, the parallels would be complete.

  33. Confused In NJ says:

    I’m still petitioning the Pope to excommunicate Mario Cumo.

  34. reinvestor101 says:

    I hate these damn commies. They have the damn never to start talking shlt about us getting our damn house in order and cutting spending. Look, you damn commies, some of us don’t give a tinker’s damn what the hell you think. Yeah, you loaned us money. So damn what? You’ll get your money back when we’re done with it. In the meantime, stop crying like a damn baby just take the damn hit. You need to be glad we gave you an opportunity to hold some of our gilded notes. We didn’t have to do that.

  35. Confused In NJ says:

    NEW YORK/SHANGHAI (Reuters) – China bluntly criticized the United States on Saturday one day after the superpower’s credit rating was downgraded, saying the “good old days” of borrowing were over.

    Standard & Poor’s cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation’s budget deficits and climbing debt burden.

    China — the United States’ biggest creditor — said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

    “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China’s official Xinhua news agency said in a commentary.

  36. chicagofinance says:

    I guess I will be proved wrong or right on Monday, but I don’t see it.

    The downgrade was due to the pointless stupidity being regurgitated in DC. If there is a sell-off now or in the future, it will result from a loss of confidence that the US can maintain sound policy, not that some beancounters are performing a CYA because they blew it 3 years ago.

    Also, any investment committee worth its salt has already planned for this contingency months ago. I see no movement due to any qualitative consideration on Monday, but to your point, it would be due to investors having a form based investment guideline that has to be followed to the letter. But to my prior post, I would assume that even the buffoon-chucklehead shops are going to find some loophole (e.g., split rating; or using UST in lieu of AAA) to keep their stash orderly.

    At the end of the day, the UST is more about liquidity and depth than anything else, and (AA+ negative / Aaa negative) does not change that at all. Again, Monday is the rule…price is truth…but I am guessing otherwise.

    Dissident HEHEHE says:

    August 6, 2011 at 6:57 am

    Sorry about the @ssclown comment last night.

    I think Punch is right though – you run a portfolio that requires all AAA you are likely to dump anything rated AA+ given the environment we are in and the amount of lawsuits that have arisen over MBS and CMBS etc. Alot of those banks have been sued for holding AAA rated paper in those securitized trusts because they “should have known or did know” the rating was a joke. If Moodys and Fitch follow suit on a downgrade down the road then managers open themselves up to a bunch of lawsuits. The lawsuits might be a joke and the difference between AAA and AA+ might be a joke but they still have to pay to defend them.

  37. Libtard at home says:

    Hollywood sign neighbors fume at tourist invasion
    GPS and Internet maps are making it easier for visitors to find the famous sign

    LOS ANGELES — Robert deVico can’t help but laugh at the irony: a 1920s advertisement for his Hollywoodland neighborhood lured homebuyers by promising sylvan hills “above the traffic laden arteries, congestion, smoke and fog of the metropolis” and branded the community with a giant mountainside sign.

    Today, the Hollywood sign is Los Angeles’ most famous landmark and deVico’s ridge-top street, which offers the best view around, boasts New York City-worthy gridlock.

    “It can take me 40 minutes to get out of my driveway. What if I had an emergency with my child?” sputtered the production designer, who bought his house 12 years ago. “It’s like being in Times Square.”

    Featuring postcard-perfect close-ups of the iconic sign, this tranquil neighborhood of winding roads dotted with hideaway homes and panoramic vistas has always drawn a smattering of sightseers angling to get a souvenir shot or seeking to climb to the sign itself.

    But it wasn’t a problem until two years ago, when GPS and Internet maps started giving directions to the sign, allowing tourists to easily navigate a maze of narrow streets, dead-man’s curves and tiny cul-de-sacs.

    Now, scores of tourists pour into the neighborhood daily in rental cars and tour vans, causing safety hazards and headaches ranging from sheared off fire hydrants to fender-benders to blocked driveways, not to mention noise, trash and car exhaust at four main picture-taking vistas.

    The succinct message recently painted on a dirt patch —”tourists go away” — sums up the sentiments of many residents.

    “This neighborhood just wasn’t built for this,” said Sarajane Schwartz, president of the Hollywoodland Homeowners Association. “We’re pretty much at the end of our rope.”

    The builders of the 1923 sign, which today just spells out “Hollywood” in higgledy-piggledy metal letters 45 feet tall by 37 feet wide, could have hardly imagined how decades later it would symbolize the world over not only a city, but also the pursuit of larger-than-life dreams of fame and fortune.

    The sign was erected by the Hollywoodland Real Estate Group as an epic billboard for its upscale housing development — the original sign spelled out the entire name. In 1949, the Hollywood Chamber of Commerce restored the rusting monument, but dropped the last syllable.

    The sign, which has appeared in countless TV shows and movies, draws sightseers from Iowa to Iceland. Many are disappointed they cannot walk to the letters, which are protected from vandals and the curious with a 24-hour surveillance camera and fence

    If they try to climb the hill, a guard yells at them through a megaphone, another annoyance for local residents, along with low-flying helicopter tours and microphone-narrating tour guides.

    Star City Tours guide Tim Eggers, who brings his tour van to deVico’s ridge-top road, said he often gets hassled by neighbors, but noted DeRonda Drive is a public street.

    “This is an international landmark. They should have thought of that before they bought their houses,” he said. “My job is to get tourists the best shot, and this is it.”

  38. Annie says:

    When all else fails – let’s blame the attorneys. The real issue is that buyers are using the home inspection issues as a second chance to renegotiate the purchase price or cancel the contract. Please and thank you go along way but money speaks louder!!!

  39. Ben says:

    China is the main culprit in this debt crisis. The only way the debt ballooned to the levels it did was because China and other nations were hellbent on manipulating their own currencies by buying up all the treasury debt in the market.

  40. Anon E. Moose says:

    Annie [38];

    buyers are using the home inspection issues as a second chance to renegotiate the purchase price or cancel the contract. Please and thank you go along way but money speaks louder!!!

    Or the inspection reveals long-neglected issues that materially affect the price of the house, ones the seller was all to happy to slap a coat of paint over to get through the closing. Here’s a tip sellers — you want there to be no issues with the home inspection, fix your damn house when things break.

    You’re right that money goes a long way, and seller have only one dial to turn when the house isn’t selling. Sellers are only fooling themselves.

  41. yo'me says:

    #39 ben

    exactly!! We the stupid seen their appetite for our debt,we just kept on printing bonds.The other issue is the trade deficit.With their surplass in dollars and pay their importers in their own currency,they have to park those dollar surplass somewhere.Guess where,it is in the treasuries.During those times of strong dollar they buy our treasuries with yield plus the increase in value of the dollar.They were making out like a bandit.I know blackmarket trader of the dollar during the 80’s.All they have to do was buy dollars and hold them till it hit certain targets.They sell dollars at a high premium.
    That was when we stopped manufacturing and kept buying their products and ask our selves,how do they make money? Now we found out they made trillions from us.

  42. cobbler says:

    Had anyone followed up?

    cobbler says:
    July 24, 2011 at 11:45 pm
    Dare I recommend buying some Aug calls on SDS and FAZ?

  43. yo'me says:

    If the UST yield start to rise we have something to worry about.I don’t see where else they will park their dollars not unless a new global reserve currency is created. The downgrade will be meaningless.They know we can always print to pay them.QE1,QE2,QE3 anyone?

  44. A.West says:

    Juice Box (30),
    That’s old fashioned thinking. The modern attitude is that you were just lucky to have been born a earner and a saver. Thus according to philosopher John Rawls, you entered an imaginary compact with those unlucky sorts who never saved or planned for the future, and in the coming years, your savings will be spent on housing and feeding them. To the extent that your family is greedily trying to maintain some material advantage over your unluckier brothers despite the efforts of the redistributionist state, you will be cursed and maligned for “not contributing your fair share”.

    Now, you might feel that you are somehow being punished for your virtues, while others are rewarded for their vices, and you might feel that you have woken up in a camp of cannibals. And you might be right.

  45. Dissident HEHEHE says:


    I remember Schwab got sued for having a bunch of AAA rated sub-prime MBS in a money market fund and those MBS trusts are all being sued by the insurance companies over ignoring underwriting standards and just going by the AAA stamp. I guess it could be as easy as just the filing of a prospectus supplement clarifying the invesment criteria of the fund/portfolio etc. If there’s no impact on the prices then there probably won’t be any lawsuits in the first place.

  46. Kettle1^2 says:

    Got popcorn. Things are heating up fast.

    German Govt: Italy Too Big For EFSF To Save – Spiegel
    German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
    German Govt: Italy Must Make Savings, Reforms To Exit Crisis – Spiegel
    Italy Debt Guarantee Could Raise Doubts Over Germany’s Finances – Spiegel
    German Govt: EFSF Should Only Help Small, Mid-Size Countries – Spiegel

  47. Mikeinwaiting says:

    Ket popcorn & a bottle of scotch are in order for Sunday night as futures open.

  48. Mikeinwaiting says:

    The scotch is to celebrate by the way. I have already done well by using a triple leveraged short ETF the past couple of weeks.

  49. Kettle1^2 says:


    here is where it starts to get interesting. Tthe debts of Greece, Portugal and Ireland, together, are a fraction of the debt in jeopardy represented by any one of Spain, Italy or France. The ECB will be forced to print substantial amounts of euro’s. Now we get to see if trichet’s press is bigger then bergabe’s.

    Of course China could step in and buy several trillion in Euro debt. While they will step in and buy i doubt they would be willing to buy at that scale in the time period needed.

  50. yo'me says:

    Asian states and Russia are likely to retain their U.S. Treasury holdings after Standard & Poor’s cut the U.S.’s sovereign credit rating to AA+ as European governments expressed confidence in the world’s largest economy

  51. yo'me says:

    “They won’t be happy about it, but Asian central banks will just have to hold on and stick it out,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “There is pressure on them to hold on to liquid assets and there is nothing more liquid than the Treasury market. At least Treasuries have been doing well and they aren’t holding on to distressed assets.”

  52. Comrade Nom Deplume says:

    (144) west

    Even Rawls back away somewhat from the monster he created. He foresaw that his theories would lead to a society uninterested in bettering itself.

    After all, if someone worked hard to study medicine, and racked up a mountain of debt, only to find that a gen practitioner would be allowed to keep only what a bus driver kept, well that would be a huge disincentive and we would run out of GPs pretty fast.

    Now that I think about it, aren’t we running out of GPs?

  53. Comrade Nom Deplume says:

    (44) west

    If this society maligns and curses you, then you find one that doesn’t.

    Doesn’t Jim Rogers live in Singapore?

  54. Comrade Nom Deplume says:


    Replied to your lame and hypocritical jibe in the last thread.

  55. Kettle1^2 says:


    this isn’t so very far from where we already are:

    ID Document in Argentina? Only if you’re Illegal.
    My wife went to get her new ID document this morning and just came back empty handed.
    The new identification document is necessary for voting in the next elections and there are some places around the city where they supposedly deliver the ID the same day, but after waiting in line for a couple of hours a person informed her that they had ran out of numbers for “her type” of ID.
    “What do you mean my type of ID?” my wife asked.
    “We have IDs, but only for those that are without documentation”.

  56. cobbler (42)-

    SDS and FAZ: two very, very old friends of mine.

    At some point, I know- like the sun comes up tomorrow- that I will catch the wave again on one of these leveraged inverse ETFs and ride some schlock, Ponzi issue into the toilet.

    And, I know that I will once again be rich…and have the same sickening feeling about it that I had in the fall of ’08. I remember making a reservation at Le Bernardin…then, Daniel…then thinking, “aah, just fcuk it all”.

  57. mikey (48)-

    You got a tiger by the tail there, pal.

    I recommend tight stops and Maalox on your cereal. And never forget you are lined up in a Texas hedge against every faction of TPTB.

  58. yo (51)-

    We’re so far down the rabbit hole, a UST rally wouldn’t surprise me. Liquidity- phony or real- is the name of the game. If our big creditors can’t get the old-style smack, they might just take our watered-down methad0ne.

    Only problem with all this is: who can tell the difference between the junkies and the dealers? Once you’ve rolled your country’s treasury in fiat crack like Tony Montana on a coke bender, you’re no better than your counterparties and just as susceptible to all the bad shit that comes when the tray, the grinder and the straws are taken away.

  59. cobbler says:

    clot [57]
    Right now, my question about these 2 ( I loaded up with calls two weeks ago) is whether to sell them on Monday or hold till expiry…

  60. Comrade Nom Deplume in Mass. says:

    The Star Ledger, relying on the CBPP for its “data” denies that this would ever happen

    NPR, relying on data from a UMass econ professor (they neglected to mention he was a marxist. Really. I studied in that department) denies that this would ever happen.

    Hmmm. Two liberal media outlets, relying on the most leftist data sources available, deny that this would ever happen.

    Oh, snap.

  61. NWNJHighlander says:

    We’re not AAA? The Empire’s Blind
    August 7th, 2011
    By David Goldman

    What a bunch of yutzes. America doesn’t merit a AAA rating? What the blankety-blank is S&P talking about? We’re the only big country in the the world that will still have taxpayers when a newly-issued 30 year bond matures. America’s working-age population is growing. Europe’s and Japan’s are disappearing. And S&P says that WE have a problem?

    Working-Age Population, By Region

    Remember, S&P is the rating agency that sold its soul to Wall Street for structured-product ratings business. Why aren’t those guys in jail for fraud, given the exhumation of emails showing that S&P employees knew exactly what they were doing? The answer is that S&P’s lawyers take the position (which no-one has challenged) that S&P’s ratings are Constitutionally-protected free speech, like a newspaper editorial. After the shocks of 2008, no-one wanted to make more waves by going after these self-appointed arbiters of the credit system.

    What hooey. The US government should sue them for their malfeasance during the structured credit bubble. There are still securities rated AAA by S&P trading at 40 cents on the dollar.

  62. yo'me says:

    “Beijing has few options other than to continue to purchase United States Treasury bonds, Chinese officials are clearly concerned that China’s substantial holdings of American debt, worth at least $1.1 trillion, is being devalued.”

    Both parts of this statement are wrong. Beijing has the option to stop buying dollars from its exporters. The reason that the government accumulates dollars and other foreign currencies is that it buys the currency from the companies who are exporting to the United States and other countries.

    It has the option not to buy the currency. This would force the exporters to sell their dollars in international currency markets which would lower the value of the dollar. The lower valued dollar would help to correct the trade imbalance between the United States and the rest of the world. This is the adjustment process that is supposed to take place in a system of flexible exchange rates.

    The second part of the statement, that “Chinese officials are clearly concerned that China’s substantial holdings of American debt … is being devalued,” is almost certainly wrong because Chinese officials should know with absolute certainty that it will be devalued. The only plausible route through which the trade deficit in the United States will be brought into balance is through a large reduction in the value of the dollar. Everyone who has taken an intro econ class knows this, so presumably China’s top economic officials understand this fact. They presumably have made the judgement that maintaining their export market in the United States is worth the expected loss on their dollar holdings.

    Finally, as a matter of accounting identities, the existence of the large U.S. trade deficit means that it will be a net international borrower. In other words, the headline of this article that “China Tells U.S. It Must ‘Cure Addiction to Debt'” is absurd. China’s decision to prop up the dollar against the yuan is the main cause of the trade deficit that makes the U.S. a net borrower. In other words, it is China’s own actions that lead to the U.S. borrowing that it is complaining about.

    Dean Baker

  63. hoodafa says:

    Clot has been predicting riots of this kind for quite some time now…just another instance of this blog being years ahead of everyone else.

    London wakes up to aftermath of worst riots in years

    LONDON, Aug 7 (Reuters) – London picked itself up on Sunday from some of the worst violence seen in the British capital for years which politicians and police blamed on criminal thugs but residents attributed to local tensions and anger over rising financial hardship.

    Rioters throwing petrol bombs rampaged overnight through an economically deprived district, setting police patrol cars, buildings and a double-decker bus on fire.

    More at:

  64. Fiddy Cents on the Dollar says:

    But most of the news-spewing outlets told us “The Debt Ceiling has been raised and the crisis has been averted !”

    And Americans changed the channel in record numbers to the new season of Jersey Shore or to Casey Anthony’s Parole Status.

  65. Annie says:

    #62 I will be violating Pol Correctness here, but be that as it may,the uneducated or under educated population is growing, including the large illegal segement of it.

  66. Al Mossberg says:

    APMEX not accepting orders until Asian markets open. Never seen this before.

  67. chicagofinance says:

    By Mark Gongloff
    Q: What’s the difference between AAA and AA+? That doesn’t sound so bad.

    A: It’s not so bad — and there’s not much difference. Technically, AA+ is considered “high grade” credit, while AAA is “prime.” The likelihood of getting paid back by a AA+ credit is considered “very strong,” while a AAA credit’s likelihood of paying you back is “extremely strong.” See the difference? Me neither.

    Getty ImagesAnd the U.S. is a special case, given its status as the world’s largest economy and printer of the world’s reserve currency. If your personal credit score falls, then you will almost certainly have to pay more to borrow. The U.S. can get away with a slight credit-rating downgrade without having to pay more to borrow. In fact, many other large, developed economies, including Japan, Canada and Australia, have lost AAA ratings in the past and not had to pay more to borrow in the long run.

    Q: Luxembourg is rated AAA. Is the U.S. really a worse credit risk than Luxembourg?

    A: No way. Luxembourg is a great country and a perfectly sound credit risk, but it lacks many of the advantages of the U.S., including the aforementioned economy and reserve currency, along with a very large printing press for that currency. If anything, this downgrade exposes some of the other discrepancies in ratings around the world. Should bonds issued by the European Financial Stability Facility, the entity set up to help bail out European sovereigns, really have a AAA credit rating, for example?

    Q: Won’t some investors be forced to sell because of even this small downgrade?

    A: Maybe, but not very many. Given the liquidity and relative safety of Treasurys, many regulators and money managers put Treasurys in a special category apart from rating considerations. Other managers are considering tweaking their rules to allow them to keep Treasurys.

    U.S. banking regulators have confirmed that the downgrade will not force banks, which have big Treasury holdings, to raise any more capital as a cushion against losses. Short-term Treasury ratings weren’t affected, so money-market funds won’t have to sell

    Q: What about foreign investors? Surely they’ll sell.

    A: Probably, but they may not sell much. They’ve been trying to diversify their holdings for years, but they keep running up against an impregnable hurdle: They’ve got nowhere else to go. For better or worse, Treasurys are the largest fixed-income asset class in the world, by far, and the likelihood of default is next to nothing. The dollar is, for now at least, the world’s reserve currency, meaning foreign central banks will have to keep buying Treasurys. There’s really no other alternative available.

    Q: What is the likely effect on interest rates, then?

    A: Very hard to say, given all the cross-currents affecting markets right now. In a perverse sense, this downgrade has come at just about the best possible time for the U.S., despite the turmoil in the markets and anxiety about the economy. Those very uncertainties have driven investors around the world — including foreign central banks — to the safety of U.S. Treasurys, pushing U.S. borrowing costs to nearly their lowest levels in generations. So any increase in rates will come off a very low base. If interest rates rise half a percentage point, for example, that might put 10-year Treasury yields at 3% — still an extraordinarily low rate.

    What’s more, the market has been bracing for this downgrade for a while, particularly on Friday, when rumors of it were widespread. It’s possible that most of the increase in yields has already happened. In any event, the history of Japan, et al, suggests that a downgrade might have no long-term impact on borrowing costs at all. Investors will likely respond more to inflation pressures, the direction of short-term interest rates and economic growth than to what one or more rating agencies say.

    Q: Will this affect corporate-bond ratings or borrowing costs?

    A: Not for most. Several AAA-rated insurance companies and some other financial firms with ties to the government are at risk of a downgrade, S&P has said. Most other corporate borrowers will be unaffected. Only four U.S. non-financial companies — Automatic Data Processing, Exxon Mobil, Johnson & Johnson and Microsoft — have AAA ratings. They will not be downgraded as a result of the U.S. downgrade.

    Like the government, companies — including those with less-than-AAA ratings — have been borrowing at the lowest levels in decades. That is unlikely to change as a result of the U.S. downgrade. If anything, they could benefit as investors look for higher-yielding alternatives.

    Q: How about the mortgage market?

    A: S&P has warned it could downgrade government-backed mortgage agencies Fannie Mae and Freddie Mac, and we’ll have to take them on their word for that. Fannie and Freddie were effectively nationalized during the crisis and have the backing of the U.S. government. In theory, their downgrade should raise rates on mortgages across the country. But mortgage bonds have been in even hotter demand from investors than Treasurys lately, given their higher interest rates and government backing.

    Kevin Cavin, mortgage strategist at Sterne Agee in Chicago, says the mortgage market may have already braced for the downgrade. While the unsecured debt of Fannie and Freddie might suffer, Mr. Cavin suggests, mortgage bonds, which have actual houses backing them as collateral, could stay in high demand.

    In any event, mortgage rates have fallen to record lows recently, without sparking much of a boom in refinancing or new-home purchases. That means any small increase in mortgage rates will likely have little effect on the housing market.

    Q: What about the muni market?

    A: Here’s one area where there could be some real turmoil, though the long-term effects are difficult to discern right now. There could be widespread downgrades of municipalities that lean on federal backing, which could hit the muni market. The size of this impact, and its duration, remain to be seen, however. Just as Treasurys benefit from a scarcity of competitors, investors looking for relatively safe, tax-exempt bonds don’t have many alternatives to munis. That’s why many muni analysts think the damage could be small.

    Q: Anything else?

    A: There’s a grab bag of assorted debt that could get downgraded now, S&P has warned, including bonds issued under government lending programs established in the wake of the financial crisis, some ETFs, hedge funds and more. It’s difficult to say yet how far-reaching this will be or how much chaos it could cause.

    Q: Any effect on the stock market?

    A: This could cause some short-term turmoil as investors try to assess the impact, but that’s no sure thing. Some nations’ stock markets have quickly shrugged off downgrades in the past, notes Jason Goepfert at Sundial Capital Research, while others have not, so history is not much of a guide.

    Coming just after the worst week for markets since the financial crisis in 2008, the timing for U.S. markets couldn’t be much worse. That said, there has been some warning that this was coming. And if investors determine the long-term effects will be manageable, any short-term market losses could be made up quickly. Like Treasurys, stocks will probably ultimately be affected by more than the rating agencies.

    Q: Does anybody even take the rating agencies seriously? Didn’t they help cause this mess in the first place?

    A: A downgrade is no doubt a psychological blow, a rebuke to the nation. Confidence in U.S. policy makers was already flagging, and this will not help. What’s more, some investors are a captive audience for the agencies, having to change their strategies based on what the agencies say. But it is true that the agencies contributed to this mess by failing to properly rate the mortgage-backed securities that were at the heart of the financial crisis. The government is so deeply in debt partly because of the damage done by that same crisis. The image of the rating agencies took a serious blow, and S&P arguably has not helped its reputation much with its handling of this downgrade.

    If anything, this could lead policy makers and investors to take even greater strides away from their dependence on rating agencies, a process that began in the aftermath of the crisis.

  68. Al Mossberg says:

    Another update from the GATA conference with Jim Sinclair.

    “It was Friday evening in London when I wrote this piece after excusing myself from the GATA conference festivities to report back to you.

    I will be back at my post in the AM on Saturday ready for the battle ahead, assuring you in the process that victory is ours.

    Allow me simply to summarize what exists in the gold market at the present time.

    1. There are no signs whatsoever of a top in the gold price.
    2. When $1,650 was selected mathematically based on probabilities it was simply the first level off the bottom that might have offered a top. It has not.
    3. The key number in the gold market is $1,764.
    4. As gold approaches that number you can anticipate furious but very short price reactions.
    5. Thursday and early today you may have witnessed the last great attempt of the Short Cabal to discredit gold shares.
    6. Various member of the voluntary Short of Gold Shares Cabal are quietly looking towards the exit.
    7. There are quite a few hedge funds now seeking quality gold share positions where the leverage might exceed the percentage leverage left in gold itself.
    8. Dean Harry Schultz said that I should call him when gold trades at $2,400.
    9. Stay near your phone my dear friend of more than 45 years, Dean Harry.
    10. Alf Fields, a man a great integrity, went silent two years ago because he did not want to publish short term interim highs that might have lost gold positions for the less than fleet of foot. Before Alf went quiet he spoke of $3,000 plus. I believe Alf to be the man to watch, if he will speak.
    11. The compromise crafted by the US Senate and House by which the debt ceiling was raised is the event that has broken confidence in US financial management internationally. History books will point that out as the low point of judgment in this entire drama.
    12. As long as the good Lord permits me, I will be by your side. My job is not to pontificate but to identify resources for you. Every trade has two events. One is in and the other may be diversification. I dedicate myself to seeing that clearly for you. A virtual reserve currency is coming. You will not be able to own or trade that virtual reserve currency as you have been able with the dollar. Gold will be attached to that virtual reserve currency via a broad measure of world liquidity. It will be something akin to a planetary measure of liquidity as M3 was in the past for the dollar. That linkage, which is not convertibility, will translate into price, but no central bank of any nation will need to add to or delete from their then reserves.
    The Goldmans of the world will invent OTC derivatives and maybe even a listed second derivative to speculate on word liquidity via the gold price. There will be no 1980 type collapse in the gold price. Over valuation which occurs in all bull markets might be by 20%. This will result in producing gold mining shares becoming the utilities of 2016 onward.”

  69. Kettle1^2 says:

    I love the smell of burning Tires and Molotov c0cktails in the mornng! It smells like victory!

  70. Kettle1^2 says:

    Given the UKs history of sieges we could get some good shows if we have a few students of history in the rioters crowd

  71. morpheus says:

    God, I hate it when I am right.

    During the fiasco known as the debt ceiling debate, i was awed by the inability to compromise displayed by TPTB.

    Thus, bought my “evil black rifle”. Should be here next week. Attended my first NRA course this weekend. Next weekend is the shotgun course. shooting cancelled this weekend due to bad weather. Will shoot rifle and shotgun next weekend.

    Bought a kel-tec SU-16CA. (yes I know…kel tec not the best. I dont need the best). Wanted something light, easily placed into a back pack and could carry a fair number of rounds in the backpack.

    next purchase: shotgun–12ga….(like the new kel tec KSG…good luck on getting that for a long time!)

    After that, .308. I am liking the DPMS models.

    If this is not a wake up call, I don’t know what is.

    Since I am mostly invested in equities, monday is going to be very painful.

    a liberal gun owner–I am truly unique.

  72. morpheus says:

    BTW…behind on reading all the prior posts. Hope to catch up soon.

  73. cobbler says:

    The question is to what extent the last week’s market slide discounted the pending downgrade already… there is absolutely nothing S&P told that hadn’t been known, it’s not like the analyst looks at some company’s finances and discovers some obscure data there that no one else noticed before…

  74. gary says:

    WASHINGTON (AP) — A top White House adviser is blaming the downgrade of the U.S. credit rating on tea party Republicans, whom he says were unwilling to compromise on how to reduce the federal debt.

    The adviser to President Barack Obama, David Axelrod, tells CBS’ “Face the Nation” on Sunday that the decision by the Standard & Poor’s credit agency to downgrade the U.S. from AAA to AA+ for the first time was strongly influenced by weeks of standoff between Democrats and Republicans over the debt.

    Axelrod calls the action, in his words, “a tea party downgrade” and says it’s clearly on the backs of lawmakers who were willing to see the country default to get their way.

    Axelrod also criticized GOP presidential candidates for not speaking up in favor of compromise.

    LMAO!!! Good one…

  75. Barbara says:

    “When all else fails – let’s blame the attorneys. The real issue is that buyers are using the home inspection issues as a second chance to renegotiate the purchase price or cancel the contract.”

    Nonsense. I am paying today’s market price for a house I expect to be in excellent working order. We had an inspection last week, there were a few problems that included broken sashes, knob and tube, broken concrete, some plaster falling etc. If the sellers did not want to address any issues, then put the house up “as is” and at a lower price. I’m paying for what I am getting the day I close, not what *I* will make of in the coming year. I don’t pay for unrealized potential.

  76. Barbara says:

    As a result, the sellers got estimates and are covering our closing costs. As it should be.

  77. Al Mossberg says:

    Dont know what to expect tomorrow. Could be more carnage. Im more interested in what happens Tuesday.

  78. cobbler says:

    Al [80]
    The only thing about tomorrow I can bet on is that gold goes up…

  79. Kettle1^2 says:


    I combat a larger ammo load at a lower caliber makes sense. But for buyout or defense I would argue that a larger caliber that turns cover into conealment might be a better choice. For example in a buyout situation I would take .308 over .223 and carry a handgun.

    A .22 or 9mm carbine has the ammo quantity advantage but falls short in lethality compared to the larger rifle calibers. If you engage in a high volume firefight the chanec of survival drop quickly.

    The military has found that the large majority of firefights ake place at 50 yrds or less. At that range a .308 fmj will penetrate most objects an opponent would take cover behind.

    A side benefit is that you can easily hunt with .308 wee pistol calibers would be difficult. I’m nit shooting down your setup just offering an opposing take.

    My buyout, SHTF would be a .308/7.62 and .45 for me and a 9mm and 5.56 for my wife

  80. Kettle1^2 says:

    Both rifles have carbine length barrels which makes them appropriate for close quarters or mid-range engagements.

  81. cobbler says:

    As Corporate Profits Rise, Workers’ Income Declines
    …The Commerce Department last week reduced its estimates of economic growth in 2010 and early 2011. At the same time, it said corporate income was much better than it had thought. Using newly available data from 2009 corporate tax returns, the department raised its estimates of corporate profits by 8.3 percent for 2009 and 10.8 percent for 2010.

    The new figures indicate that corporate profits accounted for 14 percent of the total national income in 2010, the highest proportion ever recorded. The previous peak, of 13.6 percent, was set in 1942 when the need for war materials filled the order books of companies at the same time as the government imposed wage and price controls, holding down the costs companies had to pay.

    In the first quarter of 2011, the latest figures available, the new estimates indicate corporate profits accounted for 14.2 percent of national income, well above the 13.1 percent that had previously been estimated…

    …The latest figures indicate the smaller businesses’ share of national income fell to a 17-year low of 7.7 percent in 2009, but recovered to 8.3 percent in 2010 and in the first quarter of this year.

    Employees have always received more than half the total national income, until now. In 2010, the percentage of national income devoted to wages and salaries fell to 49.9 percent, and it slipped a little more to 49.6 percent in the first quarter of this year. That continued decline may help explain the economic worries of many Americans who have jobs but still fear they are falling behind…

    …in the past, unemployment was generally low when corporate profits were high. In 2006, the unemployment rate ended the year at 4.4 percent — and that was higher than it had been in other postwar years when the corporate share of national income was high. At the end of 2010, the jobless rate was 9.4 percent. On Friday, the government reported that the rate was 9.1 percent in July….

    Someone here mentioned Obama’s anti-business policies, right?..

  82. Al Mossberg says:

    Alan Greenspan interview.

    “US treasuries are absolutely safe to invest in. The US can pay any debt it has because it can print money to do that. There is zero probability of default.”

  83. A.West says:

    AG is right. The US will default on the dollar so that paying treasuries is easy. US doesn’t issue in a currency it can’t print. The rise of gold illustrates the extent that the US is already defaulting.

  84. Barbara says:

    That’s a lot of work. Thanks. I skimmed but will study more later. This whole backing up assertions with verifiable data thing is truly amazing.

  85. Annie says:

    #78 – I agree. Sellers need to fix their POS before listing their house for sale. Realtors should be brutally honest with sellers.

    I was just saying that buyers use this opportunity to get a substantial monetary credit from the sellers.

  86. Dink says:

    NE #86,

    There is no timeframe on the x-axis for the price:income & mortgage rates:price charts.

    This is great information by the way and very much appreciated!

  87. Neanderthal Economist says:

    Dink, thanks, which page is missing the x axis? i see data on all of them. Maybe its the way scribd is diplaying the charts. Sometimes you have to wait 2-3 minutes before it downloads all of the data. try again and let me know page, i’ll fix.

  88. cobbler says:

    NE, excellent job with the chart! You can certainly be more persuasive as NAR chief economist than a sequence of hacks they’ve got…
    Chart suggests btw that one can’t believe in RE being overpriced AND Shadowstats CPI at the same time.

  89. 4c says:


    CS NY/NJ MetroIndex Price: you can find it anywhere-shows nothing
    NY/NJ MetroHome Price – Nominalvs InflationAdjusted: Bottom two are again well known and show we have ways to go. the green Neanderthal one is ridiclous-why you did not use gold price instead
    NYMetroCase Shiller Price toRent Ratio: Well known shows we have ways to go
    CS NYMetroHome Prices toNJ MedianHouseholdIncome Ratio:shows we have ways to go
    Mortgage Rates andHome Prices:shows we have ways to go
    NeanderthalTotalHome CostAffordability Index: Laughable-property tax not included-really?
    Case Shiller NYMetro-%Crashfrom Bubble Peak – NominalTerms:”bouncing off” hahaha-means nothing-why don’t you show us the %rise?
    Case Shiller NY Metro: shows nothing but speculation

    A bunch of graphs whose factual component shows at least 2o%-30% further correction, augmented with an imaginary-hand-waiving component used to justify that prices are stabilized.

    To those who bought recently: stop flooding us with stabilization arguments and stats, be humble and pray for the best because you risk soon being underwater.

  90. A.West says:

    I think property could overshoot the income multiple on the downside. With taxes and other costs rising, only cheap rates make 4x seem possible.

  91. 3b says:

    #93 Charts or no charts, there is no sense talking about stabalization with all the uncertainity all still there with more just added.

    Still high unemployment, Challenger and Gray large job cuts for July announcement, stagnant wages, more layoffs on Wall St, high local property taxes, oh and now whatever happens with the U.S, down grade.

    Stabalization is simply a pause for the next leg down IMO. Any one out looking now, (myself included) should be brutally agrressive when bidding etc., regardless of what some charts might say.

  92. cobbler says:

    LONDON (Reuters) – The Euro system of central banks has decided to intervene decisively on markets to respond to the escalating debt crisis, a euro zone monetary source said after a European Central Bank conference call on Sunday.
    Officials on the conference call carefully considered the situation in Italy and Spain, and took note of a statement by France and Germany which stressed their commitment to European financial reforms, the source said.
    “The Euro system will intervene very significantly on markets and respond in a significant and cohesive way,” the euro zone monetary source said, adding a statement by the ECB will be issued shortly.

  93. cobbler says:

    4c [94]
    Forecasting is difficult, and no one knows for sure what will happen. To me, looking at the medians makes little sense at all since rapid destruction of the middle class changes the income distribution from flattened Gaussian to almost bimodal, so RE market should follow. However, attacking NE’s effort because your opinion is different from his, is silly. Make your own set of charts…

  94. Neanderthal Economist says:

    4c, you are hillarous but im dying to see your analysis

  95. Neanderthal Economist says:

    “Chart suggests btw that one can’t believe in RE being overpriced AND Shadowstats CPI at the same time.”
    Ha, good point Cobbler, didnt think of it that way. For what its worth, i think shadowstats is way overestimating inflation (and BLS is under estimating). Just my opinion. Westy suggested to use shadowstats a few months back and i think its a really cool chart to get you thinking but im not sold on its accuracy.
    And dont tell 4c about your observation, judging from his comments he lives in a world where inflation doesnt exist at all.

  96. Mikeinwaiting says:

    Veto 86 thanks for your work on the charts. My call (MIW) is almost here for my area as far as overall I see more downside albeit at a slower pace . Long slow bleed for RE into the foreseeable future.

  97. Neanderthal Economist says:

    “I think property could overshoot the income multiple on the downside. With taxes and other costs rising, only cheap rates make 4x seem possible.”
    West, thats a possibly for sure. High rates would def drive prices way lower id guess but I had to control for a consistent environment in the model and that meant making assumptions about low rates and low inflation in future, which may or may not actually happen.

  98. 4c says:

    “Make your own set of charts”

    why do I need to? The classic graphs, some reproduced by Neand-the ones without his “personal touch”-show that we are AT LEAST 20-30% off bottom.

    “judging from his comments he lives in a world where inflation doesnt exist at all”

    what? in your world inflation does not exist as you make no mention of property taxes and as you make no mention of stagnant incomes which are effectively decreasing because of overall inflation.

    However, you fail to take into account the general state of the economy, from increasing commuting expenses, to municipal debt, to shrinking retirement benefits and income, to us debt and rates, to unemployment, to demographics etc that were not present 10 years ago. Even your timing is wrong. A day earlier most people saw their 401k shrinking to several thousands and US was downgraded for the first time and this is only just a start.

    Your graphs are simplistic and you make a disservice, despite the time you spent, by misleading the people in this blog who are looking to buy, but can hold longer, as they might find themselves underwater.

  99. Dink says:

    NE #92,

    Page 5 & 6 I do not see the axis.

  100. Dink says:

    4C #103,

    You are way off base. You may think his graphs are simplistic but please tell us where you find more advanced analysis of the housing market, especially for the local region. For someone to compile this data, put it together, and offer it up to a collective group that seeks this information and have it called a “disservice” is preposterous.

  101. Dink says:

    NE #92,

    I couldnt see them when I was using Firefox. I tried IE and could view them. Thanks again!

  102. Neanderthal Economist says:

    “you make no mention of property taxes and as you make no mention of stagnant incomes”
    4c this statement is wrong. I mention explicitly that the calculation doesn’t include prop taxes so the reader can draw his/her own conclusions. You’re also wrong about leaving out stagnant incomes as the price to income reflects that relationship over 25 years. You spew a dissorganized, neverending hyper-negative laundry list of the worlds worst problems with absolutely zero context as if any of them are novel. Its laughable. But again, lets see your analysis. Go ahead and post the link. If you can attempt to quantify 1/8 of the toxic garbage you just unleashed at 103 you deserve $1million.
    Bye the way im a renting bubble sitter.

  103. 4c says:


    How do you call an analysis advanced when one believes that
    -property taxes are irrelevant
    -economy/us debt/muni debt is worsening is irrelevant, and
    -when inflation is up this makes houses affordable.

    there is only argument over there, namely mortgages rates are low but don’t you see this is realtor speak? This is the realtor’s advanced analysis.

  104. 4c says:


    I don’t care whether, you are a realtor, a renter, or clot himself. If you do not address increasingly important factors such as property taxes, % of income available for housing (after retirement savings, inflation etc), and demographics, your analysis is useless and better be ignored.

    Also stop asking me to do my own analysis. It requires a lot of work that you obviously did not/did not want to put BUT there is no need at this point as things are obvious and I spent already too much time criticizing you.

  105. Neanderthal Economist says:

    4c, let’s first clarify that you know next to nothing about any of the topics that you list at 108. And you now are taking my statements and charts and restating them to be the complete and extreme opposite, which shows that you’re incapable of reciprocating any type of logical discussion.

  106. Neanderthal Economist says:

    4c you’re pretty much a complete moron. Let’s agree on that much. And you can’t produce an analysis because you’re incapable.

  107. Neanderthal Economist says:

    4c, seriously we all want to see your property tax and demographic analysis. lol. Yep just go ahead and post it. Any day now.

  108. Neanderthal Economist says:

    My name is 4c and prices need to go down another 20% because im negative and I say so. You don’t need any charts or factual data because they will do you a disservice. You need to listen to me talk in circles and have faith that im right and realtors are wrong. Just know that my rediculous claims are backed up with demographic and property tax data, which I will never ever be able to produce in a million years.

  109. All hype says:

    I am just channel surfing and came upon Paul Ryan on Fox news. He looks like he has been dead for 3 days.

    The stench of death is strong on this early Sunday evening.

  110. Kettle1^2 says:


    we have a ways to go yet. Frances debt bomb is one of the biggest in the EU. Everyone is couting on France and Germany to bail out everyone else. There is no one big enough to bail France out.
    Even better France has serious racial tension with the immigrant Muslims that aren’t full contained as is. Wait until u see the riots that break out with the Muslim tensions involved when their debt bomb goes off

  111. cobbler says:

    Armagheddon real-time special with Tom Keene and other interesting people will be on Bloomberg TV beginning at 8 pm.

  112. xmonger says:


    France Muslim riots will challenge the Jersey Shore for ratings supremacy next year. Perhaps the JS crew goes to France for Spring 2012 and we get an all in one?

  113. cobbler says:

    kettle [114]
    France’s constitutional system allows the executive to do many things totally unimaginable in the U.S., like singlehandedly raise the retirement age. They will manage alright. Regarding the rioting Muslims, they’ve had those a couple of years back, doesn’t seem to have an effect on the economy.

  114. cobbler says:

    So far, futures are down reasonable 2.5% or so, gold up 40, oil down 2.5. USD very marginally weaker. AAA-rated Oz 10-year bond up huge (yield down 0.25%).

  115. Kettle1^2 says:

    cobbler 117

    perhaps. I am no expert, but i suspect that france gets a bit more bruised then that. They will have to do more then up the retirement age, and the locals will not stand for that without voicing a potentially boisterous opinion.

    The racial tensions are widely under-reported according to some of the people i work with at the fench operations of one of my clients. My understanding is that the muslim immigrants already feel “cheated” by the government. The government reduces or removes a few of their subsidies and it could make for a respectable riot.

  116. Kettle1^2 says:


    My guess as a professional janitor is that we see gold ay 1550 before we see 1750.

  117. Fabius Maximus says:

    Before everyone goes off and gets up in a bunch over the London riots, let me put some perpective on this. Guy gets shot in a cab, family do a Reverend Al march to the police station, and it gets handled badly.

    This area kicks off every twenty years or so. Google “Broadwater Farm” for the last time.

    It’s is funny that I used to live a half a mile away from the site.

  118. A.West says:

    Good charts as usual. None of us know where they will go, but illustrating where the past has been on multiple dimensions is thought provoking, and helps one make a better guess of future likelihoods and what’s likely to help or hinder prices.

  119. Fabius Maximus says:

    Have a friend looking some advice for the shore. He has a realtor that is pushing some good bargains in Southhampton. Even if he is driving Thursday night, Monday morning, LI is still a pain of a drive. He is driving from Essex.

    His big requirements are kid friendly, 4-5 bed, and most important, it needs to usable in the winter.

    Any ideas on areas he should look in.

  120. 30 year realtor says:

    With regard to all the home inspection/negotiation issues, I am aware of agents, attorneys and buyers who fully intend to squeeze a seller based upon home inspection issues before they even know which house will be purchased. The only deals that make it to closing today are those where the seller is willing to continue to capitulate.

    It is a reality that buyers get taken advantage of in seller’s markets and sellers taken advantage of in buyer’s markets. All the blanket justifications based upon the condition of the house has little to do with the process. Hidden defects aside, the negotiator who holds the cards based upon the condition of the market prevails most frequently

  121. Neanderthal Economist says:

    Thanks West glad you could appreciate and find useful, im happy to share with everyone, if for nothing else than to get some valuable discussion going. I think you’re correct to say nobody knows where prices are going, whether you model out a forecast in excel or simply use your gut feel, anybodys guess is as good as anyone elses.

  122. Juice Box says:

    Re: 123 – Shore as in NJ? Tell your friend the commute from here is minimal now since the high speed easy pass lanes were put in, no more stop and go traffic all summer except for the occasional accident. Thursday night someone launched their car between the local and express lanes near Homdel and landed sideways on the guardrail, it added about 10 minutes to my commute. I am in Spring Lake all summer and have been doing Thursday night to Monday morning commutes with little traffic except for the Holland Tunnel. There are forsake signs on every street and loads of deals to be made.bFamily has been coming down on Firday evening and they report n traffic.

  123. Juice Box says:

    Forsake? Lol how do you turn off spell check on the iPad? NJ shore is a kids paradise, Hamptons in my opinion are way overrated, unless you desire to be a Playa like JJ and rub elbows with the glitterari.

  124. Comrade Nom Deplume says:

    Stench of death now overpowering

    I just got back from the Boston area and turned on the tube.

    Hang Seng opens down almost 3%

    Dow Futures off 217 points

    Gold nearing $1,700

    I am glad I kept on the sidelines the last few days. I predict that even Monday isn’t an entry point. After the dead cat bounce on Tuesday, the cat corpse will go over the cliff.

    Dow 10K, here we come.

    In other news, my family members in Mass. that have the accidental Nompound (didn’t start that way, but it works) are buying physical (coins) and having it set into jewelry in such a way that it can later be removed easily. Ironically, they aren’t interested in keeping the Nompound, so I am starting to discuss purchasing it from them.

  125. Comrade Nom Deplume says:

    I see now that Timmay has been encouraging people to stay in Treasuries.

    If that isn’t a contrarian indicator, then I don’t know what is.

    We are so fcuked.

  126. Comrade Nom Deplume says:

    some unrelated news from south of the (NJ) border:

    The legal prof community is outraged, and Widener is already enough of a joke of a law school that if the board values its scalps more than political correctness, they will show the dean the door.

    And given the subject matter, where’s Jamil when he’s needed?

  127. Al Mossberg says:

    Looks like Clot and Whitney are going to be right about muni’s.

    “While the impact on Treasurys as a result of the downgrade may be limited (after all the other side of the Atlantic is about as ugly as the US, so where could $8 trillion in marketable USTs practically go… at least for now), the same may not be said about the far smaller, $2.9 trillion municipal market, which is about to see a blanket downgrade tomorrow as S&P warned on Friday night, and of which Matt Fabian of Municipal Market Advisors earlier said that “There will be hundreds and hundreds of municipal downgrades, which will not do well to bolster investor confidence.” The scary bit: “Treasuries may be able to shake off a real impact from the downgrade. Munis I’m less sure about.” Indeed, with futures already trading, and most risk assets experiencing a brief knee jerk reaction on a global coordinated PPT response by the G-7, there is still little clear understanding of what will really happen to not only the traditional system but to shadow liabilities such as repos and money markets. And munis are just one part of all of this. So what will happen if tomorrow the muni market starts unravellling, as Whitney, among so many others, has predicted?”

  128. morpheus says:

    good .308 rifle is rather heavy. the .223 rifle I purchased is very light (4.5 lbs) and folds to less than 25 inches in length. It is a bug out rifle. light, easy to carry and more concealable than a .308. I will eventually get one of those, but right now this is the rifle i will start with.

    One step at a time.

    did order a 1000 rounds of ammo for it today.

  129. Comrade Nom Deplume says:

    Tax news of the day:

    “Does a recent Tax Court decision threaten the “carried interest” tax break beloved by managers of private-equity funds, venture-capital funds and, to a lesser extent, hedge funds?

    Yes, says former top Treasury official Michael Graetz: “This decision in Dagres v. Commissioner [136 T.C. No. 12 (Mar. 28, 2011)] gives the Treasury Department a clear opportunity to write regulations raising taxes on carried interest.” Mr. Graetz is now a professor at Columbia University’s Law School.

    No, says independent tax analyst and Columbia Business School adjunct professor Robert Willens: “This decision doesn’t give the government unbridled authority to change the tax treatment of carried interest.” …

    Now there is an important voice siding with the skeptics—the Tax Court’s. … The ruling in Dagres v. Commissioner wasn’t directly about carried interest but contains an important ruling on it that experts are now parsing. … Wrote Judge David Gustafson: “Neither the contingent nature of [Mr. Dagres’s carried interest] nor its treatment as capital gain makes it any less compensation for services.” The opinion also likened his business to that of “stockbrokers, financial planners, investment bankers, business promoters, and dealers”—all of whom pay taxes on their income at rates up to 35%. …

    Prof. Graetz says Treasury officials could use the decision to do administratively what Congress hasn’t done legislatively—tax carried interest as ordinary income. Mr. Willens calls the holding “troubling for private-equity and venture-capital fund managers and investors,” but notes that it doesn’t specifically say carried interest should be taxed as compensation.”

    Graetz is correct–Treasury can and will tax carried interest as earned income. It will dare the PE partners to sue them, and further dare the GOP to side with the PE partners (GOP won’t take that bait; the partners are on their own, just them and their lawyers).

    Of course, the law of unintended consequences in the form of deadweight loss comes into play, so that any boost in revenues will be short-lived, but the administration will do by litigation what it cannot do by legislation.

  130. Juice Box says:

    Re: 131 Al – money hiding in bonds is in for a rude awakening.

  131. Juice Box says:

    Re: 131. – jamil is busy frothing a latte.

  132. Comrade Nom Deplume says:

    [121] fabius

    I got that. A garden variety riot of the sort that we have periodically in the US.

    No takeaways from that for me except the revelation that you’re a Tottenham denizen. I suppose those more knowledgeable would tell me that it was obvious, but not to me.

  133. Comrade Nom Deplume says:

    Asian markets getting smacked. PPT had better make sure they are in the office early.

  134. Comrade Nom Deplume says:

    [135] juice

    frothing a latte. Priceless!

  135. cobbler says:

    al [131]
    Bonds (including munis) defaults result from their fundamentals, not S&P ratings. While the muni rates especially the long maturities will go up a tad, in all likelihood they will be lower than what we’ve seen back in January. Besides, the downgrade will mostly go towards the currently AAA rated pre-refunded bonds, they will become AA+.

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